The Venturesome Giant

By CLAUDIA H. DEUTSCH

Published: October 5, 2007

CORRECTION APPENDED

David R. Nissen, who runs GE Money, remembers how the corporate powers at General Electric used to react whenever the subject of joint ventures came up. ''The basic philosophy was, 'If you don't have full control, don't do the deal,''' Mr. Nissen recalled.

Times have changed. In South Korea, GE Money, G.E.'s retail lending arm, has 43 percent stakes in Hyundai Capital and Hyundai Card, which offer auto loans, mortgages and credit cards. It has formed joint ventures with several Spanish savings banks to provide consumer loans and credit cards.

And it has a consumer banking venture with Garanti Bank in Turkey, in which G.E. and the Dogus Group, Garanti's parent, each own 25.5 percent, with the rest owned by institutional investors. Garanti manages that venture.

Joint ventures ''have been one of our most powerful strategic tools,'' Mr. Nissen said, noting that net income for the ventures is growing at twice the rate of his core business.

He is speaking for GE Money, but he could easily be speaking for General Electric as a whole. In the last few years, G.E. has shown an ever-greater willingness to hook up with other companies, even if it means taking a minority position.

''Sure, we could keep buying small companies and G.E.-ize them,'' said Jeffrey R. Immelt, G.E.'s chief executive. ''But we've learned that it's better to partner with the No. 3 company that wants to be No. 1 than to buy a tiny company or go it alone.''

At G.E., that attitude is a shock to the corporate culture. Even Mr. Immelt concedes that ''our culture is based on the idea that our management approach is right.''

But managerial imperialism is a luxury G.E. can no longer afford. ''They need to be in more geographic and technological markets, and joint ventures let them spread both risk and capital around,'' said Daniel J. Rosenblatt, an analyst at Marble Harbor Investment Counsel, which owns G.E. shares.

G.E.'s new openness to joint ventures is a culmination of several converging trends.

For one thing, the days when it could buy whatever it wanted are pretty much over. ''G.E. used to be the 900-pound gorilla with the magic bag of money,'' said James E. Schrager, clinical professor of entrepreneurship at the Graduate School of Business at the University of Chicago. ''But these days, if there's a neat company for sale, the private equity people offer the highest price.''

G.E.'s global push is a factor, too. This year, for the first time, G.E. will derive a majority of its revenue from overseas. Much of the incremental growth will come from areas in which G.E. has had a paltry presence, as well as from countries like China, where the economic and legal systems are in flux.

''When you don't know how the local laws will go, then joint ventures are the low-risk, high-return strategy for entering new markets,'' said Deane M. Dray, an analyst at Goldman Sachs.

But perhaps most important, Mr. Immelt has repeatedly promised to keep G.E. growing faster than the American economy. For a company whose revenue topped $160 billion last year, that is no small task. By taking partial ownership of a lot more companies than it could buy outright, G.E. is enhancing chances for a breakout hit and reducing the damage of an outright flop.

''Jeff's mantra is growth, growth, growth, so he's had to put more eggs into the joint venture basket,'' said Noel M. Tichy, a professor at the University of Michigan Business School.

G.E. has done joint ventures before, of course. It has a longstanding 50-50 venture with the French state-owned aircraft engine maker Snecma, and another with Fanuc of Japan to make controls for electrical equipment.

GE SeaCo, which G.E. and Sea Containers of Britain formed nine years ago, has become one of the world's largest lessors of shipping containers. And MSNBC started out as a joint venture with Microsoft. (G.E. bought Microsoft out last year, but the two companies still jointly run MSNBC's digital operations.)

But those ventures came about only after G.E. had explored other ways to gain access to a particular market or technology.

''We used to go into talks saying 'acquisition,' with joint ventures a distant second choice,'' said Pamela Daley, senior vice president for corporate business development. ''But we now see J.V.'s as a great way to dip a toe into a new market.''

Examples are rife. G.E. and Hitachi are combining their nuclear operations and plan to pursue markets jointly outside the United States and Japan. G.E.'s commercial finance unit, taking GE Money's lead, has set up a lending venture in Turkey with Garanti. A few months ago, G.E. briefly considered bidding for Dow Jones -- but only in partnership with Pearson, which owns The Financial Times.

NBC Universal -- itself a joint venture, formed in 2004 with Vivendi, which owns 20 percent -- has teamed up with the News Corporation to form Hulu.com, a video-streaming Web site, ''and at one point we even tried to bring in a third partner, because the more content the better,'' said Jeff Zucker, chief executive of NBC Universal.

Correction: October 8, 2007, Monday
An article in Business Day on Friday about General Electric's increasing participation in joint ventures misstated the corporate location of Sea Containers, one of G.E.'s partners. Sea Containers is registered in Bermuda, not Britain. (The company has a regional office in London.)